Operator: The next question will come from Alexander Goldfarb with Piper Sandler.
Alexander Goldfarb: Just want to go back. I think Ric or Keith, I think at the beginning of the call, you mentioned the expectation for nationally 400,000 unit absorption this year, 200,000 of which would be in the Camden markets. But I think they’re like close to 700,000, 650,000 units expected to be delivered this year. So just wanted to better understand the comments around absorption. And then also as part of that, are you — we all understand what’s going on with the supply but — are you suggesting that the share of housing going to apartments versus single-family will obviously continue to sustain. And therefore, versus historically where jobs would be more of the factor. It’s really more the household formation that’s really the factor now into next year.
Ric Campo: It sounds like you answered the question. Yes, that’s what’s going on. I mean we’re — without amazing job growth, we’re still able to produce a lot of demand and it’s all a function of different demand drivers and jobs, right? And today, if you look at the share that we’re — that apartments are taking from the household formations and you look at it historically, it’s double what it has been for a long time. And so that’s — it’s almost the same as what’s happening in the single-family for sale market is their market share has doubled at least and maybe even tripled from the norm because of the lack of inventory of single-family homes to buy because of the lock-in effect. So you have an interesting situation here where we are continuing to benefit from the high cost of homeownership and continuing to benefit from in migration, both international immigration and migration from other cities.
So yes, there’s a lot of units under construction. We know that. But the demand, it seems to be if these demand numbers are close to being right, is going to create if you will, a soft landing for the supply. And that’s kind of the — that’s the model that we put forth there.
Alexander Goldfarb: Are you adjusting that the 400 million versus the 770 million.
Ric Campo: No. Well, 670 is not what the absorption is going to be, Keith, you have those absorption numbers we discussed today.
Keith Oden: In Camden’s markets, yes, the completions that we have that we’re modeling are 230,000 apartments across Camden’s platform in 2024. And that number drops to about 200 in 2025. So just to make sure we’re talking apples and apples versus national numbers. It’s 230 in Camden’s markets.
Ric Campo: Yes. And that 600 coming in the pipeline doesn’t all get delivered in 2024. A part of that is into 2025 as well.
Operator: Next question will come from [indiscernible] with Wells Fargo.
Unidentified Analyst: I just wanted to get your thoughts on timing of fundamentals. So just thinking about your guidance for new leases, slightly negative but they were much worse in January on both effective and signed. And then if you look at your current occupancy versus your projected occupancy, it seems like an uptick. So do you think that when you think about the first half versus the back half, do you think it gets better into the back half and that’s where the pickup is? Or do you think that January was — or January is kind of an anomaly and the numbers are just going to look better off the bat?
Alex Jessett: So the first thing I would tell you is if you look at our signed new leases in January — excuse me, our signed blended leases in January are better than are effective which is a leading indicator of improvements. What we are anticipating that we’re going to have blended trade outs in the first quarter of about 0.2%. So a slight uptick from where we are today but we are anticipating that occupancy is going to remain flat in the first quarter at 95%. And then the improvement comes throughout the year. As number one, we have better comps which are very helpful for us. And then we also sort of hit our seasonal strong periods as we move from the second quarter into the third quarter.
Unidentified Analyst: And then you think it stays strong in 4Q or you think [indiscernible]
Alex Jessett: Yes, we’ve got a 4Q blended trade out of 1.6% and occupancy of about 95.2. So I think that sort of follows the normal seasonal patterns that you would see.
Operator: The next question will come from Adam Kramer with Morgan Stanley.
Adam Kramer: I just wanted to ask about external growth and acquisitions specifically given where the balance sheet is at — to EBITDA at 4x at quarter end, I mean what would kind of be needed to happen for them to be upside to the acquisition number? And you kind of step into that underlevered balance sheet?
Keith Oden: So the primary thing that would have to happen on acquisitions is we have to see better going in yields, even though there’s been a lot of transaction volumes are way down. There’s still a huge bid-ask spread between buyers and sellers. They’re just — we just don’t see — we don’t see value right now in the acquisition market versus other uses of capital. Now that’s not to say that at some point, that doesn’t change. I mean, obviously, there is with all of this new supply that’s been built and primarily by the merchant build community. At some point, they need to move past the current crop of their development pipeline and kind of recharge their organizations. They are in the business of building apartments. And so they’re all — I think they all have way too much — way more than they would normally care to have in terms of their development pipeline and holdings.
So at some point, there’s going to be a rationalization not just in the rental supply market between supply demand. But in the transaction market between a product that needs to find a permanent home, not in the merchant build community and people that are willing to provide that and have the capital to do it. So we are in the latter group, we just don’t think we’re there yet. And we just think being patient right now is the right strategy for the acquisition market.
Ric Campo: Analog [ph] just completed this week and we had, of course, our huge team out there and this is kind of the start of the sort of acquisition disposition dance. And people were — compared to last year — last year, I would categorize as during the headlights. And this year is a little less during the headlights and more cautious optimism because rates have come down some. And that’s keeping some of the pressure off of people having to sell. But there’s still just a massive bid as spread between people who want to buy versus people who want to sell. And so the question will be how do the operating fundamentals look going forward? And what — how do people feel about the world and what happens to rates. And I think people are more optimistic now that they can enter the acquisition market because — last year was, I don’t want to make a mistake what if the Fed does all these things now we’re on a trajectory, it looks like to lower rates someday.
